Archstone Solutions Ltd v Mutukula Regional Market Ltd and Karamagi Karim (Civil Suit 316 of 2024) [2025] UGCommC 113 (30 April 2025)

THE REPUBLIC OF UGANDA INTHE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) HIGH COURT CIVIL SUIT 0316 OF 2024

ARCHSTONE SOLUTIONS LTD…………………………. PLAINTIFF

VERSUS

1. MUTUKULA REGIONAL MARKET LTD.....................DEFENDANTS

2. KARAMAGI KARIM

BEFORE: HON. LADY JUSTICE SUSAN ODONGO

JUDGMENT

The background to this matter is that:

On 1st May 2021, the Plaintiff and the 1st Defendant executed an agreement wherein the 1st Defendant contracted the Plaintiff to construct a market yard to gravel standard for Mutukula Regional Market at Mutukula. The contract price was agreed at Ugx 1,347,900,000/=. The agreed payment schedule stated that payment for all the works carried out on site would be made after 14 working days of approval of certificate by project engineers; and the 1 st Defendant would effect payment within 30 days from certification.

The 1st Defendant has since paid the Plaintiff Ugx 66,000,000/ leaving a balance of Ugx 206,000,000/-. The 2nd Defendant issued to the Plaintiff bank cheques but the same were dishonoured by the bank for insufficiency of funds.


The Plaintiff then filed this summary suit, for the liquidated sum, under Order 36 of the Civil Procedure Rules, S. I. 171-1. The Defendants filed an Application for unconditional leave to appear and defend the summary suit disputing the liquidated sum and stating that they have a good defense to the suit. In the Affidavit in support, the Defendants/Applicants denied being indebted to the Plaintiff/Respondent to the alleged sum of Ugx 206,000,000/= but rather to a sum of Ugx 34,000,000/=. According to the Defendants/Applicants they had agreed that they would pay the Plaintiff/Respondent Ugx 100,000,000/= for the works. That they had paid the Plaintiff/Respondent Ugx 66,000,000/=leaving a balance of Ugx 34,000,000/=. The Defendants/Applicants did not attach the contract which reflects this position.

The Plaintiff/Respondent filed an affidavit in reply by which he reiterated the claim in the summary plaint, attached the agreement and prayed that the Application is dismissed with costs.

When the Application came up for hearing, the Defendants/Applicants did not appear, the Plaintiff/Respondent was in Court. Upon the application of the Plaintiff/Respondent, the application was dismissed with costs to thePlaintiff/Respondent.

The Plaintiff/Respondent in addition prayed that the Court enter judgment in the summary suit for the liquidated sum. This Court brought it to the attention of the Plaintiff/Respondent that there are competing dispute resolution agreements in the contract.

According to clause 7 of the Agreement the dispute settlement provision states:

*"In event of any dispute between the parties arising from this agreement, such dispute (if not resolved by mutual agreement within 30 days)shall be referred for arbitration or courts of law governed by the Laws of Uganda, whicheverthe aggrieved party may choose".*


The Special Conditions Clause 25.1 states that the procedure for disputes shall be as specified in GCC 25.2 to 25.4. Special Conditions Clause 25.4 provides for the dispute settlement mechanism to be by *Arbitration conducted in accordance with the Arbitration and Conciliation Act, 2000 of Uganda and the place of Arbitration agreed as Kampala, Uganda.*

At the hearing, the Plaintiff/Respondent implored the Court to rely on clause 7 of the Agreement which provided the dispute settlement mechanism to be either by arbitration or by court, at the option of the aggrieved party. He further submitted that the parties had previously been to mediation but had failed to amicably resolve the matter. The Plaintiff/Respondent expressed doubtfulness that arbitration would resolve the matter.

The Decision:

Standard Form Contracts like the one the parties concluded comprising; an Agreement, the General Conditions and the Special Conditions, are typically used in construction projects which require extensive detail. For proper reading, parties often insert a 'Precedence Clause' to address conflict such as the one before this court. To the extent that, in the event of any inconsistency the parties would have expressly agreed to which document in the Contract prevails.

Special Conditions are negotiated to address specific situations, and therefore are considered more specific and intentional providing clarity in case of ambiguity or uncertainty. In most legal and contractual frameworks, unless otherwise expressly agreed, if there is a disagreement between the Standard Contract and the Special Conditions Clause, the Special Condition Clause usually takes precedence because they are considered more reflective of the negotiated and agreed position of the parties to the Contract.


With particular regard to dispute resolution provisions, Courts respect the parties' choice of dispute resolution mechanism. Where parties agree to a dispute resolution mechanism outside of Court, it ousts the jurisdiction of the Court. In cases where the agreement contains both Arbitration and/or Court as a dispute resolution mechanism, rather than dismissing the arbitration clause, the Court adopts a practical approach, by reading these clauses in harmony, rather than in conflict with each other, recognizing the arbitration clause as a valid and independent agreement while interpreting the other alternative as allowing the Court to oversee the arbitration process. Inclusion of an arbitration clause by parties infers that they intended it to have effect and were unwilling to render it meaningless. Arbitration clauses retain their validity unless language compels the conclusion that the parties, having gone to the trouble of inserting a broad arbitration clause, intended to eviscerate the clause almost entirely by preceding it with a service of suit clause. *(Melford Capital Partners, LLP and Others Vs. Frederick Digby (England and Wales High Court (Chancery Division April 19, 2021)).*

In light of the foregoing, I find that the arbitration agreement in the Special Conditions Clause 25.4 prevails, is operative and capable of being performed.

I hereby make the following orders:

- 1. Civil Suit 0316 of 2024 is stayed and referred to Arbitration in accordance with section 5 of the Arbitration Conciliation Act Cap. 5. - 2. Each party bears its own costs.

Dated, signed and delivered electronically this 30th day of April 2025.